Indians spend 60% more on overseas education, travel ahead of new academic session: RBI data
As per the central bank's latest figures in its monthly bulletin, outlays on overseas travel under LRS surged 56% to $568 million in May year-on-year, whereas expenses on education and maintenance of close relatives grew 88% to $334 million and 21% to $300 million respectively.
Overseas travel spends by Indians rose more than 60% year on year in May right before the next academic season, Reserve Bank of India (RBI) data showed. This manifests their increased spending on overseas travel and education.
As per the central bank's latest figures in its monthly bulletin, outlays on overseas travel under the Liberalised Remittances Scheme (LRS) surged 56% to $568 million in May year-on-year, whereas expenses on education and maintenance of close relatives grew 88% to $334 million and 21% to $300 million, respectively.
Meanwhile, these three expenditure heads comprised 80% of $1.5-billion outflows under the LRS scheme. Under the LRS scheme introduced by the RBI, resident Indians are permitted to spend up to $2,50,000 a year abroad for a particular allowable current account and capital account outlay.
These comprise expenses on overseas travel, education, maintenance of close relatives, gifts to family and friends abroad and medical expenses. Furthermore, some capital account costs such as investments in overseas stock, properties, bonds and deposits are also a part of this limit.
The Liberalised Remittance scheme (LRS) was introduced by RBI on February 4, 2004, with a limit of $25,000. The LRS limit has been revised in stages consistent with prevailing macro and micro economic conditions. Funds transfers under the LRS scheme have been increasing over the past five years following the RBI's decision to expand the scope by including certain transactions under overseas travel and education spends. Outward remittances under LRS jumped from $4.6 billion in FY16 to $13.8 billion in FY19.
There has also been a spike in spending on university tours by families of aspirant students going abroad for undergraduate studies. Foreign education has picked up pace lately and has become a major source of dollar outflow.
Meanwhile, the NDA-2 government is also aiming at bringing reform in higher education. Finance Minister Nirmala Sitharman in her Union Budget 2019 speech announced to provide Rs 400 crore for world-class institutions. The Finance Minister added that a draft legislation for higher education commission will be presented. Sitharaman also launched Study in India programme to attract foreign students to study in India.